Abe defends consumption Tax Hike as Inevitable

January 28, 2019

Tokyo--Prime Minister Shinzo Abe, in a policy speech before the Diet, Japan's parliament, on Monday, defended a planned consumption tax hike in October as inevitable to allow the country to cope with its aging population.

Abe reiterated his eagerness to settle a territorial dispute with Russia, saying he will not pass it to the next generation.

The prime minister did not mention whether his ruling Liberal Democratic Party will present its draft for constitutional reform. He only expressed hopes that the Commission on the Constitution of each chamber of the Diet will deepen discussions.

He apologized for recently revealed irregularities in a key labor ministry survey, pledging to conduct a thorough investigation to recover public trust.

The policy address before the Diet was the last by the prime minister in the country's Heisei era, which is set to end with Emperor Akihito's abdication on April 30.

During the speech to plenary meetings of both chambers of the Diet, Abe said that the consumption tax hike to 10 pct from the current 8 pct is "inevitably necessary to overcome population aging and build a pan-generational social security system."

"The biggest challenge for our country's sustainable growth is the aging of society," said the prime minister, underscoring the need for "a different dimension of policies" to tackle the issue.

In a bid to help realize the so-called desired birthrate of 1.8, Abe pointed to a plan to make preschool education free of charge from October this year and take a similar step for tertiary education for low-income families from April next year.

To ensure sustainable economic growth, Abe vowed to take "more than enough" stimulus measures on a scale equivalent to all proceeds from the consumption tax hike.

At the same time, the prime minister highlighted his government's commitment to fiscal consolidation, with the aim of achieving a primary budget balance surplus by fiscal 2025.

Abe said he now aims to wrap up his so-called globe-overview diplomacy, which he started when he returned to power in December 2012.

He said the government will accelerate its negotiations with Russia to resolve the two countries' territorial dispute over four Russian-held islands, claimed by Japan as the Northern Territories, based on the 1956 Japan-Soviet joint declaration.

The declaration calls on the Habomai group of islets and Shikotan, two of the four islands, to be handed over to Japan after a peace treaty is signed.

The four islands were seized from Japan by Soviet troops in the closing days of World War II. The territorial disputes prevents Tokyo and Moscow from concluding a peace treaty to formally end their World War II hostilities.

In his Diet speech, Abe voiced his willingness to hold a summit with North Korean leader Kim Jong Un, with a view to resolving the issue of Japanese abductees in North Korea.

Amid soured Tokyo-Seoul ties, Abe made little mention of South Korea, saying only that Japan will closely cooperate with the international community, including the United States and South Korea, in dealing with North Korea.

On national security, he said that as countries are now competing in cyberspace and outer space, Japan will drastically speed up reform to acquire new defense capabilities.

The prime minister said the government will proceed with the planned relocation of the U.S. Marine Corps' Futenma air base to the Henoko coastal area in Nago, Okinawa Prefecture, southern Japan, based on more than 20 years of talks with local communities, for an early return of the current base site in Ginowan, also Okinawa.

Elsewhere in the speech, Abe said the government will make thorough preparations for this year's Imperial succession, so that people in the country can celebrate the event together.

Crown Prince Naruhito is scheduled to accede to the throne on May 1, the day after Emperor Akihito, his father, abdicates. Jiji Press